1. These appeals are directed against the validity of the initiation of proceedings under Section 147/148 of the Income-tax Act, 1961 ('the Act'), in respect of the assessment years 1968-69 and 1969-70, on the ground that the assessee's income from interest accruing and arising on the amount of compensation payable to the assessee-company had escaped assessment in respect of the aforesaid two years.
2. The learned Commissioner (Appeals) has upheld the validity of action under Section 148 in respect of the assessment year 1969-70, but has quashed the said proceedings in respect of the assessment year 1968-69.
Therefore, the assessee is aggrieved by the order of the learned Commissioner (Appeals) in respect of the assessment year 1969-70, whereas the department is aggrieved of the aforementioned order of the learned Commissioner (Appeals) in respect of the assessment year 1968-69.
3. The circumstances in which proceedings under Section 147(a) were initiated by the ITO against the assessee-company may be noted : The assessee-company owned an electricity supply undertakings at Rohtak, Hissar, Hansi and Bhiwani towns of the then Punjab and later Haryana State. The company's licence to supply electricity to the aforesaid towns expired on 8-4-1962. On its expiry, Punjab Electricity Board (predecessor of Haryana State Electricity Board) took over the undertaking in terms of the provisions of Section 66 of the Indian Electricity Act, 1910. The statutory notice of one year of the Government's intention of take-over having already been given to the assessee-company, Rs. 1 lakh were given to the assessee-company 'on account' pending the determination of the final compensation to be paid to the assessee-company. In the return filed by the assessee for the assessment year 1963-64, the company declared the above fact of take-over of its undertaking by Punjab Electricity Board as also the factum of Rs. 1 lakh having been given to it as an ad hoc payment and that the final compensation was yet to be determined. The above statement of fact was noted by the ITO in para 1 of his assessment order while completing the original assessment for the assessment year 1963-64 on 21-12-1966.
4. Negotiations between the assessee-company and the Punjab State Electricity Board regarding the compensation to be paid in respect of the assets taken over continued up to December 1966. As the two sides could not reconcile their difference with regard to the compensation to be given, both sides named their arbitrators and referred the matter for their award. The two arbitrators could agree with regard to the compensation to be paid to the assessee-company in respect of eleven (item 1 to 11) of the assets only. With regard to the rest of the items, there could be no agreement between the two. Thereupon the matter was referred to the umpire, Shri B.P. Sinha, in February 1970.
Shri Sinha gave his award on 12-7-1970 determining the quantum of compensation of various items at Rs. 7,28,423. To this, he added a solatium at the rate of 20 per cent amounting to Rs. 1,45,684. Total compensation, thus, determined was Rs. 8,74,107. To this amount, he further added interest at the rate of 6 per cent per annum from 1-1-1967 to 31-7-1970. In respect of the said interest, the umpire made observations in paragraph 11 of his award, the relevant parts of which may be extracted here for ready reference : 11. It remains to consider the very controversial question of interest. The claimant-company has claimed interest at the rate of 12 per cent per annum from the date of taking over until the date of payment of the compensation money. It is argued on behalf of the company that as the matter of determination of the compensation to be paid to the company has been pending for years and several years must elapse between the date of taking over and the date of the determination of the amount of compensation, and as the Board might take its own time in making full payment of the amount of compensation, ultimately determined as payable to the company, it is only just and equitable that the company should be entitled to interest. The contention further is that the company itself has to pay interest of near about 12 per cent to the bank on its own borrowings ; it is fit and proper that the company should be fully reimbursed in the matter of interest. It is true that the company has been paid only Rs. 1 lakh on account, at the time of the taking over, and is being kept out of the remaining amount of compensation that may ultimately be determined as payable to it; it is not a matter to be decided on considerations of justice and equity. I should have felt bound to award the interest claimed, but the Electricity Act does not entitle the company to claim interest as of right.
In certain other cases, the Electricity Act does contemplate payment of interest but not in cases like the present. Hence, the claim for interest from the date of taking over has to be disallowed. But the question still remains whether the company, should be entitled to claim interest pendente lite, that is to say, from the time the arbitration proceedings commenced in December 1966, until the date of the final determination of these proceedings, and until the date of actual payment of the amount determined and ultimately found due to the company. In my view, I am competent to allow interest at the usual rate of 6 per cent per annum during the period of the pendency of the arbitration proceedings, that is to say, from January 1967 until the date of this award, and also until the date when the outstanding amount found due to the company is actually paid to the company....
5. The aforesaid award of the umpire was contested in the Court of Senior Sub-Judge, Hissar, on various counts by either sides.
Ultimately, a compromise was reached between the two contestants on 19-6-1971, wherein the total amount of compensation including 20 per cent solatium was determined at Rs. 8,07,921 as against the sum of Rs. 8,74,107 determined by the umpire. Interest at the rate of 6 per cent was agreed to be paid by the State Electricity Board from 1-1-1967 to 20-6-1971 amounting to Rs. 1,83,982. In terms of the said compromise, the Senior Sub-Judge, Hissar, passed a decree on 22-6-1971, awarding the aforesaid compensation and interest to the assessee-company.
6. The assessee had in the meanwhile filed his return of income for the assessment year 1968-69. Along with it, the assessee had filed certain notes. In note No. 1, forming part of Annexure 'A', the assessee disclosed the following facts : The Punjab State Electricity Board took over the Electric licence from 8-4-1962 and an 'on account' payment of Rs. 1 lakh was received during 1962-63 as compensation. The final compensation payable is not yet determined. The matter has been referred to arbitration by the company and the Electricity Board has also nominated their nominee as arbitrator. The proceedings are still continuing and the Court has allowed further time to arbitrators to give their award before 26-2-1969.
In the return filed by the assessee-company for the aforesaid year, it did not disclose any income from interest, nor did it disclose that it had claimed interest at the rate of 12 per cent from the arbitrators with regard to the compensation to be paid to it from the date of taking over to the date of the award. Assessment on the basis of the aforesaid return was completed on 24-12-1968, accepting the aforesaid statement of facts at its face value.
7. In respect of the assessment year 1969-70 also, the assessee did not return any income from interest. The said assessment was completed on or about 11-1-1972. In the meanwhile, the decree of the amount referred to above had been passed finalising the compensation to be paid to the assessee-company as also the interest to be paid to the assessee-company. The aforesaid fact of the decree having been passed, was not brought by the assessee to the notice of the ITO in the course of the original assessment proceedings for the assessment year 1969-70.
Accordingly, the original assessment for the assessment year 1969-70 was completed without taking into account any income from this source.
8. In the assessment for the assessment year 1971-72, the ITO included the interest awarded by the umpire, Shri B.P. Sinha, in the total income of the assessee-company on the footing that the said interest had accrued and arisen to the assessee-company from the award and was, therefore, assessable as the assessee's income for the year ending on 31-3-1971. The aforesaid addition was, however, deleted on appeal by the learned AAC on the footing that the said award of the umpire had not become final as both the sides had disputed the said award in the Court of the Senior Sub-Judge, Hissar, and that no income by way of interest could, therefore, accrue and arise to the assessee-company on the basis of such a disputed award.
9. On the basis of the aforesaid finding of the learned AAC for the assessment year 1971-72, the ITO included the interest income amounting to Rs. 1,83,892 in the total income for the assessment year 1972-73, because during the previous year, corresponding to the aforesaid assessment year, the Court's decree had been passed on the basis of the compromise reached between the two parties with regard both to the amount of compensation to be paid and the interest to be given.
10. The assessee challenged the inclusion of the aforesaid interest income in respect of the assessment year 1972-73 before the learned AAC. It appears that while the aforesaid appeal was pending, the Governor of Haryana issued an Ordinance on 27-2-1975, being the Haryana Ordinance No. 1 of 1975, amending Section 6 of the Indian Electricity Act in its application to the State of Haryana. The need to pass the said Ordinance, prima facie, arose on account of the decision of the Hon'ble Supreme Court in the case of Godhra Electricity Co. Ltd. v.State of Gujarat AIR 1975 SC 32 striking down the provisions of Section 6 of the Indian Electricity Act, as violative of Articles 19(1)(f) and 19(1)(g) of the Constitution of India and holding that the taking over of the Godhra Electric Co. Ltd. was unconstitutional. Their Lordships of the Supreme Court pointed out in the aforesaid case that as there was no provision to pay interest to the licensee in respect of his undertaking being taken over by the Government, the fundamental rights of the licensee were violated. The aforesaid judgment was rendered on 15-10-1974. The Ordinance No. 1, referred to above, sought to amend provision in the law with regard to the deficiency as pointed out by their Lordships of the Supreme Court in the aforementioned case.
Accordingly, Section 6 was amended by the aforesaid Ordinance and the relevant portion of the Ordinance reads as follows : In Section 6 of the Indian Electricity Act, 1910 (hereinafter referred to as the Principal Act) : (i) after Sub-section (5), the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1960, namely,-- (5A) Whereas notice exercising the option to purchase the undertaking has been served upon the licensee under this section, the licensee shall deliver the undertaking to the State Electricity Board, the State Government or the local authority, as the case may be, on expiration of the relevant period referred to in Sub-section (1) pending the determination and payment of the purchase price : Provided that in any such case, the purchaser shall pay to the licensee, interest at the Reserve Bank rate ruling at the time of delivery of the undertaking plus one per centum, on the purchase price of the undertaking for the period from the date of delivery of the undertaking to the date of payment of the purchase price : (ii) Sub-section (5) shall be omitted and shall be deemed to have been omitted with effect from the 1st day of April, 1960 : (5) Notwithstanding anything contained in any judgment, decree or order of any Court, every option of purchase of an undertaking, in the territories now forming part of the State of Haryana, exercised by the erstwhile Punjab State Electricity Board or the Haryana State Electricity Board by serving a notice upon a licensee under Section 6 of the principal Act and every delivery of an undertaking effected by a licensee to the said Electricity Board in pursuance of such notice at any time on or after commencement of this Ordinance, shall be deemed to have been exercised or effected, as the case may be, under Section 6 of the principal Act as amended by this Ordinance, as if Section 6 as so amended were in force at all material time when such option was exercised or delivery was effected and accordingly every option of purchase so exercised and every delivery of an undertaking so effected and all things done or actions taken in consequence of such exercise of option or delivery of the undertaking shall be, and shall be deemed always to have been valid and shall not be called in question in any Court or the Tribunal or before any other authority on the ground that Section 6 of the principal Act did not provide for the payment of any interest on the purchase price for the period from the date of delivery of the undertaking to the date of payment of the purchase price.
11. In the course of the hearing of appeal for the assessment year 1972-73, the learned Counsel for the assessee questioned the inclusion of the income from interest in the assessment for the assessment year 1972-73 on the ground that the right to receive interest had been granted to the assessee-company by the recent legislation and that interest under the said Ordinance accrued to the assessee from year to year and that, therefore, the inclusion of the interest in only one assessment year, namely, 1972-73, was not justified. The learned AAC accepted the above reasoning of the assessee by observing, inter alia, as follows : 11. Amending Section 6(5) of the 1910 Act did not provide for interest. Therefore, the umpire had awarded interest from the time the proceedings were pending before him. Such interest, therefore, arose only when it was awarded. This issue came up before my predecessor who held that the Umpire's award is only a tentative determination, which was challenged by both the parties. The decree which was passed in June 1971 has been held by my predecessor to have given the appellant company right to receive such interest.
However, on the happening of such right, the interest could be included. But by the law amended by the Haryana Amending Act, the matter of interest did not any more remained a matter of discussion, deliberations and decisions by the umpire. Under Section 7(a) of the 1910 Act, the umpire was only to decide the market value of the asset. On such valuation, the appellant-company had become entitled to interest from the 8th April, 1962. Thus, the interest entitlement, which was a matter of decision by the umpire, has become a statutory right rested with the appellant-company as it was dispossessed of the undertaking on the 8th April, 1962, and was not paid any compensation till June 1971. Under the income-tax law, income can accrue only when the right to receive such income vests with the assessee. In the present case, the right to receive interest is statutory. The right to interest does not get postponed to the quantification of the compensation.
After reviewing the various case laws, from pages 8 to 11 of his judgment, the learned AAC reached his conclusion in paragraph 12 of his order as follows : 12. From the ratio laid down in the above judgment, it will be clear : (i) that the right to receive interest under the Haryana Amendment Act has arisen from April 8, 1962, and has run from year to year.
The interest is, therefore, assessable on accrual basis from year to year as against the whole of the amount included by the ITO which is clearly erroneous.
(ii) the amount of compensation determined in 1967 had actually been related back to 8th April, 1962, and on such sum, the appellant had acquired the right to receive interest on specified rates from the date till June 1971.
I, therefore, hold that the interest income from 8th April, 1962, amounted to Rs. 3,02,637 and Rs. 1,83,982 as held by the ITO but cannot be included in the total income of the appellant-company during the year under appeal. The interest income has to be assessed from year to year as per the ratio laid down in the above noted judgments. However, I find that the quantum of interest of Rs. 7,293 [proportionate interest for the period 1st April, 1971 to 20th June, 1971 (81 days)] is includible in the total income. The contention of the appellant that such sum was not received is not tenable and should be rejected on the same reasoning that interest should be held to accrue from year to year.
12. The aforesaid judgment was delivered by the learned AAC on 17-7-1976. Soon thereafter on 21-8-1976, the ITO recorded the following reasons in terms of Sub-section (2) of Section 148 of the Act for reopening the assessment for the assessment year 1968-69 : The assessee-company received a compensation of Rs. 7,07,921 and interest of Rs. 1,83,982 for the period from 1-1-1967 to 20-6-1971 from the Haryana Electricity Board, Chandigarh, on taking over of the assessee-company. Out of this amount, Rs. 50,210 was kept by the Haryana Electricity Board as audit objections, reserves. This interest was not shown by the assessee in his return of income. As the interest is to be assessed on accrual basis, hence the interest income of Rs. 42,469 has not been assessed. Thus, I have reason to believe that due to failure on the part of the assessee to disclose fully and truly all material facts, the interest income of Rs. 42,469 has escaped assessment.
Similar reasons were recorded as we understand for the assessment year 1969-70. The assessments reopened as above were completed after including the interest income in respect of the aforesaid two years as follows : 13. The validity of the aforesaid assessments was challenged by the assessee before the learned Commissioner (Appeals). The learned Commissioner (Appeals) quashed the proceedings for the assessment year 1968-69 on the ground that the said proceedings were barred by time as the proceedings for that year could have been reopened only in terms of Clause (b) of Section 147 and as the time had expired for reopening the said assessment, the ITO could not initiate proceedings for reassessment for that year. In respect of the assessment year 1969-70, however, the learned Commissioner (Appeals) confirmed the reassessment proceedings. While doing so, he made the following observations : The assessment for 1969-70 was completed on 11-1-1972. The question of interest was finalised on compromise dated 17-6-1971 being made the rule of Court on 22-6-1971. This happened when the proceedings for the assessment year 1969-70 were going on and it is common ground that there was no disclosure about this compromise having been made during the course of the proceeding for the assessment year 1969-70. It was a fact which was of primary nature, and which should have been disclosed during the course of the proceeding for the assessment year 1969-70. I am of the opinion that there was a failure or omission to disclose this primary fact of compensation and interest having been compromised between the assessee and the Haryana State Government which should have been disclosed. There was, thus, failure or omission on the part of the assessee. The assessment order for the assessment year 1972-73, during the course of which the ITO came to know all the relevant facts, was finalised in March 1975. In March 1975, the ITO could reopen the assessment for the assessment year 1969-70 under Section 147(a) on account of the assessee's failure to disclose fully and truly material facts necessary for the assessee's assessment. I am, therefore, of the opinion that for the assessment year under appeal, the ITO was within jurisdiction to start proceeding under Section 150(1) and provisions of Section 150(2) are not applicable to the assessee's case for this assessment year, namely, 1969-70. The limitation under Section 153(2) is not applicable to the facts of the case because factually assessment has been reopened under Section 150(1).
Provisions of Section 153(3) regarding limitation apply. 14. As noted earlier, the aforesaid orders of the learned Commissioner (Appeals) in respect of the assessment years 1968-69 and 1969-70, which are under challenge, one by the department and the other by the assessee.
15. The main thrust of the argument of the revenue has been that the proceedings under Clause (a) of Section 147 in respect of the assessment year 1968-69 were within time in August 1976 (being within eight years from the end of the assessment year 1968-69), that the interest to the assessee on compensation was payable statutorily by the Haryana State Electricity Board by virtue of the retrospective legislation enacted by the Ordinance No. 1 referred to above, that this matter had been adjudicated upon by the AAC in the course of appeal for the assessment year 1972-73 on the assessee's plea to this effect, that the learned AAC had clearly held that the right to receive interest had accrued and arisen to the assessee from year to year, that the assessee had not disclosed his income from this source in the original return filed for the assessment year 1968-69, that it was obligatory on the part of the assessee to disclose all his income, that the assessee had also not disclosed to the ITO that he was claiming interest at the rate of 12 per cent from the date of the take-over of the undertaking to the date of payment of the compensation to the assessee, that not giving the said information to the ITO at the time of the original assessment amounted to withholding information of primary facts from the ITO and that, therefore, the reopening under Section 147(a) was justified. As to the merits, the learned departmental representative supported the order of the ITO and submitted that the aforesaid interest income had been held to be accruing to the assessee from year to year by the AAC at the assessee's pleading in respect of the assessment year 1972-73, that there was nothing in law to show that the above view was not correct and that, therefore, the ITO was justified in bringing to assessment the aforesaid income. The learned departmental representative drew our attention, in this connection, to the decision of the Hon'ble Delhi High Court in the case of Fazilka Electric Supply Co. Ltd. v. CIT  143 ITR 551, in which case, according to the learned departmental representative, on identical facts, it has been held by the Hon'ble Delhi High Court that the interest awarded by the arbitrator did accrue and arise from year to year and could only be assessed on that basis and not on the basis of the date of the decree.
Reference has also been made to the decisions of the Hon'ble Allahabad High Court in the case of Addl. CIT v. Virendra Singh  118 ITR 923 and Moti Lal Chaddami Lal Jain v. CIT  122 ITR 949. It has been held in both the above cases that interest received for delay in payment of compensation on acquisition of land was revenue receipt and that interest accrued from year to year and could be assessed on that basis alone. According to the learned departmental representative, the approach of the learned Commissioner (Appeals) to the effect that the assessment for the assessment year 1968-69 could be reopened only in terms of Section 147(b), was erroneous for that had never been the case of the ITO and that the learned Commissioner (Appeals) had erred in holding that the assessee had no obligation to disclose the accrual of interest in his return of income because at that time, there was no law which granted interest to the assessee-company. While holding so, the learned Commissioner (Appeals) had apparently omitted to take note of the retrospective nature of the legislation brought about by Ordinance No. 1 by the Haryana State. The retrospective legislation deemed a situation to be existing when, in fact, it did not exist and when the law deemed a certain situation to exist, the officials giving effect to the said legislation had to presume that the deemed situation existed all along even though, in fact, it did not. They could not allow their imagination to boggle and stop the natural consequences of such deeming from having their normal operation. Once the Legislature deemed in 1975 that interest was accrued from 1-1-1960, it had to be presumed that the interest was payable to the assessee from 8-4-1962 onwards till the date of final payment of the compensation, even though the assessee might not have known this fact on the date when he filed his original return of income. To give effect to the retrospective legislation, it had to be presumed that the assessee did have such a right whether or not the knowledge of the said right was with the assessee.
16. The learned Counsel for the assessee opposed the above submission and pointed out that the interest, which has been received by the assessee and which is the subject-matter of dispute, is not the one in terms of the amended statute but in terms of the decree, and the nature of this interest was basically different from that of the statutory interest to be given in terms of the amended Sub-section (5A) of Section 6 as made applicable to the State of Haryana. The assessee's claim for interest from the date of take-over to the date of the payment had been specifically negatived by the umpire by observing that the Haryana State Electricity Act did not permit the awarding of such an interest. What he granted was in the exercise of his discretionary powers as an arbitrator, who called it interest pendente lite. Such an interest could not be equated to the statutory interest and would arise only on the date of the decree. The learned Counsel did admit that the plea, which was being taken by the assessee now was directly opposed to the plea that had been taken earlier by the assessee's counsel in the course of the appeal in the assessee's case for the assessment year 1972-73. He also conceded that the assessee had taken benefit of the appellate order for the assessment year 1972-73 and had been successful in getting the addition for interest made in respect of 1972-73 deleted from that assessment. He nevertheless submitted that the view taken by the AAC in respect of the assessment year 1972-73 was erroneous and that the assessee was now wiser and that he could now take the plea, which was permissible in law, despite the contrary plea, which had been taken by the assessee in respect of the assessment year 1972-73 with regard to the same income.
17. Besides, the learned Counsel pointed out that the assessee could not have disclosed in his returns what he did not know at the time of filing of the returns. The Court's decree was passed on 22-6-1971.
Return for 1968-69 had been filed much earlier and even the original assessment had been completed on 24-12-1968. The assessee could not know as on this date as to what the terms of the decree would be. He naturally could not inform the ITO, of what he himself did not know. So far as the Ordinance No. 1 of Haryana was concerned, this was enacted much later and the assessee could not disclose his income based on its provisions in 1968. According to the learned Counsel, the assessee had disclosed to the department in his return for the assessment year 1968-69 the fact of pending arbitration proceedings. There were no other primary facts that could be disclosed and which could be said to have been withheld and so the reopening on the basis that the assessee had not disclosed all the facts, would not be proper. In support of the above proposition, the learned Counsel relies on the following authorities : Modi Spg. & Wvg. Mills, v. ITO  101 ITR 637 (All.), Farashuram Pottery Works Co. Ltd. v. ITO  106 ITR 1 (SC), Rai Singh Deb Singh Bist v. Union of India  77 ITR 802 (Delhi) and Calcutta Discount Co. Ltd. v. ITO  41 ITR 191 (SC).
18. In rejoinder, the learned departmental representative submitted that the assessee should not be allowed to raise a plea contrary to what had been raised by him in respect of the assessment year 1972-73 and that it would be highly inequitous if the assessee is allowed to take advantage of his consistently shifting stands with a view to avoid the assessment of the income, which is otherwise assessable in his hands.
19. In respect of the assessment year 1969-70, the assessee's pleas were similar as raised above. The learned departmental representative, however supported the order of the learned Commissioner (Appeals) and relied on the observation made by him in para 3 of his order, which have been extracted by us in extenso above in para 13 supra. A plethora of case law was cited by both the sides, but after going through the said case law. we feel that it would not be necessary for us to refer in detail to the same for the purpose of deciding the present appeals.
We are, therefore, not referring to the catena of case law ; which was cited before us by either sides, though we have carefully gone through each case.
20. While examining the validity of reopening of an assessment under Section 147(a), we have to ascertain the state of mind of the ITO at the time when he reopened the assessment. The question that the ITO has to ask while reopening an assessment is, whether he has reasons to believe that the assessee's income had escaped assessment on account of the assessee's failure to return all the details of his income. In the present case, the assessee's own plea before the learned AAC, in the course of appeal proceedings for the assessment year 1972-73, was that the interest income accrued and arose to the assessee from year to year, and not on the basis of the decree of the Court passed in June 1971. The above pleading of the assessee was accepted by the learned AAC. Once knowledge about the income from interest accruing and arising to the assessee from year to year came in possession of the ITO and he found by reference to the income-tax returns filed by the assessee that he had not returned the income from that source in his original returns, the ITO had, prima facie, reasons to believe that the assessee's income had escaped assessment on his own pleading due to the assessee's omission to show the said income in the said returns. For determination as to whether or not the assessee's income had escaped assessment due to the assessee's omission, one had to look at the tenor objective facts, namely, (i) whether there was a return of income and (ii) whether there was mention in the said return of income from a certain source. If on physical verification, it was found that a given source of income, though existent, was not disclosed by the assessee for whatever reasons, the essential ingredients for initiating proceedings under Section 147(a) will be made out. Whether or not there was conscious state of mind which prompted the assessee not to disclose the facts, may be relevant for the purpose of establishing concealment but it is not necessary to establish such a conscious state of mind when one is to find out as to whether the income of the assessee had escaped assessment due to the assessee's failure to disclose the said income in his return of income. In the present case, as noted earlier, the assessee's submission before the learned AAC was that the income from interest did not accrue or arise to the assessee on the date of passing of the decree, that is on 22-6-1971 and that, therefore, the said income was not assessable in the hands of the assessee in respect of the assessment year 1972-73 ; and that the income had accrued and arisen to the assessee from year to year, beginning from 1-1-1967 to 22-6-1971. This plea of the assessee has been accepted by the learned AAC as tenable on facts and in law. Once the ITO learnt of the aforesaid finding, he had all the material with him to believe that the assessee's income for the aforesaid two assessment years had escaped assessment and that the said escapement was due to the assessee's failure to show the said income in the original returns for the assessment years 1968-69 and 1969-70.
21. The contention of the assessee that the assessee had disclosed all the material facts necessary for its assessment while filing the original returns is not acceptable to us. In respect of the assessment year 1969-70, may it be noted, and the learned Commissioner (Appeals) has stressed this point, the decree in question had been passed during the pendency of the original assessment proceedings for the assessment year 1969-70, yet it was not brought to the attention of the ITO by the assessee. Withholding the information on this point, while the assessment was pending, would, without doubt, amount to withholding primary information having a bearing on the assessee's total income. It is of no consequence in this connection as to what was the honest opinion of the assessee with regard to the relevance of that information to the assessment to be made. The relevance or irrelevance of it has to be left to the decision-making authority. The fact of the decree should have been disclosed and it was, admittedly, not disclosed.
22. As regards 1968-69, it is true that the assessee could not have disclosed the contents of the decree, as the return was filed in the middle of 1968 and the assessment itself was completed on 26-12-1968.
But the plea of the assessee before the learned AAC in the course of appeal for the assessment year 1972-73 was, and it is also correct, that the right to receive interest accrued to the assessee statutorily from 1-4-1962 onwards on the basis of the provision of Section 6(5A), as applied to the State of Haryana by Ordinance No. 1. May be the Ordinance was promulgated in 1975, but it deemed Section 6(5A) to be existing with effect from 1-4-1960. This putative state of affairs has to be taken at its face value and its existence from 1-4-1960 onwards cannot be disputed. The immediate consequence of this deeming provision is that the right of the assessee to receive interest existed as on 1-4-1962 but the same was not disclosed in the return or during the course of the assessment proceedings. The logical consequences of this putative state of affairs must follow in law as such for excluding the income from interest from the total income of the assessment year 1972-73 as to include the said income in the total income for the assessment years 1968-69 and 1969-70. None of the decisions, relied upon by the assessee, in our opinion, throw light on this aspect of the matter which is before us. In the case of Modi Spg. & Wvg. Mills (supra) and Parashuram Pottery Works Ltd. (supra), the record of the ITO contained the information regarding initial depreciation allowed and the written down value, (WDV) etc. The assessees had not disclosed in the returns filed by them the initial depreciation allowed to them.
The ITO completed original assessments on the basis of the WDV declared by the assessees. We subsequently discovered that the WDV's should have been adjusted by reducing the initial depreciation and the depreciation that could have been allowed to the assessee could not be more than such adjusted WDV's. He, therefore, initiated proceedings under Section 147(a). These proceedings were struck down by the Hon'ble Allahabad High Court in Modi Spg. & Wvg. Mills' case (supra) and by the Hon'ble Supreme Court in Parashuram Pottery Works Co. Ltd.'s case (supra). It was pointed out by their Lordships that the assessee had disclosed all the primary details and that the ITO could not initiate proceedings under Section 147(a). The above is not the position in the present case. The income from interest accrues and arises under Section 6(5A) of the Indian Electricity Act from year to year and the same was not disclosed. There is no remissness on the part of the ITO. The law deemed the aforesaid subsection (5A) to be on the statute book with effect from 1-4-1960 and its logical effect has to be given. The assessee had the right to receive interest, and this was not disclosed in the return. There was thus clear-cut escapement on this putative state of law. In Rai Singh Deb Singh Bists case (supra), their Lordships were dealing with loans in the names of some which had been disclosed in the original returns. The ITO noted those loans and accepted them at their face value at the time of the original assessment. Subsequently, he came to the conclusion that the loans were bogus and initiated proceedings under Section 34(1)(a) of the Indian Income-tax Act, 1922 ('the 1922 Act'). These proceedings were quashed by their Lordships by saying that all the primary facts had been disclosed by the assessee at the time of original assessment and that it was not for the assessee to instruct the ITO as to what inference he will draw from the given facts. Similar is the ratio of Calcutta Discount Co. Ltd.'s case (supra). None of these cases dealt with the situation with which we are faced in the present proceedings, namely, the effect of retrospective legislation and an income accruing and arising as a result thereof. When such be the position, the putative state has to be taken as real one and the result of it would be that income from interest accrued to the assessee in the accounting periods corresponding to the assessment years 1968-69 and 1969-70, and this was not disclosed in the returns for those years and so the same escaped assessment on account of its non-declaration in the returns. There was, thus, in our opinion, sufficient justification to reopen assessments for the years in question.
23. Then, the provisions of Section 150, read with Explanation 2 to Section 153 of the Act, cannot be ignored. The finding of the AAC in the appellate order for the assessment year 1972-73 was that the entire interest income of Rs. 1,83,892 was not assessable in 1972-73 and that it was assessable on accrual basis from year to year--see para 12 of the AAC's order quoted in para 11 supra. It was in pursuance of this finding that the assessments under consideration were reopened by the ITO. Explanation 2 to Section 153, in the circumstances, squarely applies to the facts of the present case. The said Explanation 2 reads as follows : Where, by an order referred to in Clause (ii) of Sub-section (3), any income is excluded from the total income of the assessee for an assessment year, then, an assessment of such income for another assessment year shall, for the purposes of Section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order.
In the present case, as we have seen above, part of Rs. 1,83,892 was excluded from the assessment of the assessment year 1972-73 and the assessment of such income is being sought to be made in the assessment years under consideration. The present assessments have, therefore, to be deemed to be ones made in consequence of or to give effect to the finding contained in the AAC's order referred to above. Section 150(1) provides that bar for initiation of action for assessment or reassessment shall be lifted when the assessment is sought to be made in consequence of or to give effect to the direction of the appellate authority. The said sub-section reads as follows : (1) Notwithstanding anything contained in Section 149, the notice under Section 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision.
Reassessment proceedings, in view of the above provision, will not be subject to limitation prescribed in Section 149 of the Act. If any authority for this proposition is needed, we may refer to the decision of the Hon'ble Calcutta High Court in the case of Hunger ford Investment Trust Ltd. v. ITO  146 ITR 73. In that case, action under Section 34 in respect of the assessment year 1949-50 taken on 29-10-1961 was held to be valid as the bar of limitation had been lifted on account of the finding of the AAC. The Hon'ble Allahabad High Court also took similar view in Raghunath Prasad Tandon v. CIT  51 ITR 763 and in Jawahar Lal Mani Ram v. CIT  48 ITR 837. In the latter case, action under Section 34(1)(b) for the assessment year 1946-47 taken on 4-3-1955 was held to be valid as the bar of limitation had been lifted under the second proviso to Section 34(3) of the 1922 Act (analogous to Section 150(1) of the 1961 Act).
24. The learned Counsel had drawn our attention to the provisions of Sub-section (2) of Section 150, which, in his opinion, constituted an exception to the general provisions of Section 150(1). The said sub-section reads as follows : (2) The provisions of Sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken.
In the present case, we are not concerned with 'assessment' for assessments for both the years under consideration stood completed within the normal time limits. We are concerned with reopening of the assessments or 'reassessments'. The question to be answered is : whether assessments for the years under consideration could be reopened on the date when the order appealed against, i.e., assessment for the assessment year 1972-73 was made. It is not clear from our record as to when the assessment order in question was made. The date of the AAC's order was 17-7-1976. Even on this day the normal time limit for reopening the assessments under Section 147(a) was available.
Sub-section (2) of Section 150 did not, thus, come in the way of the ITO and the reassessment proceedings cannot be said to be invalid.
25. For the reasons stated above, we are of the opinion that the commencement of the proceedings under Section 147(a) in respect of both the years was for valid reasons and was within time and, therefore, the learned Commissioner (Appeals) had no justification to quash the proceedings for the assessment year 1968-69. His order on this point is, therefore, hereby reversed and in respect of the assessment year 1969-70 his order on this point is hereby confirmed.
26. The validity of the assessments in question were challenged by the assessee on another ground also. According to him, the provisions of Section 144B of the Act did not apply to the assessments made under Section 147 and inasmuch as in the present case Section 144B had been resorted to, the assessment got vitiated and time barred. For the above proposition, he relied on the alleged decision of Nagpur Bench of the Tribunal (copy of it has not been placed on record). The learned departmental representative, however, pointed out that the matter has since been considered by the Special Bench of the Tribunal in the case of Bela Singh Pabla v. ITO  9 Taxman 114 (Delhi). In view of the Special Bench decision, with the reasoning and conclusion of which we concur, we reject the assessee's contention in this regard.
27. Now coming to the merits of the case, we are of the opinion that the subject-matter is no more res Integra. The assessability of the aforesaid interest has been the subject-matter of litigation between the assessee and the department for a number of years in the course of several assessment proceedings, namely, the assessment years 1971-72, 1972-73 and the present assessment years. In the course of assessment proceedings for the assessment year 1972-73, all the relevant facts, which have a bearing on the determination of this question, were raised before the learned AAC and the stand of the assessee in the said appeal was that the income from interest accrued and arose to the assessee by the operation of the statutes from year to year and that such interest accrued to the assessee irrespective of the decree passed by the Court and that, therefore, it was wrong to tax the entire amount in one year, namely, the assessment year 1972-73, in the relevant accounting period for which the decree in question was passed. This plea of the assessee was accepted by the learned AAC and on that footing, he held that the income from interest accrued from year to year from 1-1-1967 to 22-6-1971 and that the said interest income is, accordingly assessable in different assessment years corresponding to the aforesaid period and that it was wrong to tax the entire interest income in one assessment year, namely, the assessment year 1972-73. Accordingly, the sum of Rs. 1,83,982 which was brought to assessment by the ITO in respect of the aforesaid assessment year 1972-73, was deleted by the learned AAC from the total income of 1972-73 and only the sum of Rs. 7,293, being the interest due for the period 1-4-1971 to 22-6-1971, was included in the total income for the year. The said order of the learned AAC has been allowed to become final by both the parties accepting the correctness of the said judgment. In view of this, it is not open to the assessee in the present proceedings, which have directly arisen from the aforesaid order of the learned AAC, to retract from the pleadings made by the assessee himself in the course of the aforesaid appellate proceedings. The nature of the aforesaid income and the time of its accrual have been adjudicated upon in between both the parties by the learned AAC and both the sides accepted its correctness by not appealing against it. If the said judgment is binding on the department, it is equally binding on the assessee. The present proceedings have been initiated to give effect to the aforementioned finding of the AAC in terms of Explanation 2 to Section 153. The assessee cannot, therefore, be allowed to question the correctness of the finding which has become final and, what is more, which is as per his own pleadings.
28. Apart from the above, on general principles also, the assessee has to be estopped from reprobating his earlier stand of which he has already taken advantage. Thus, in Sri Raja v. Sarvagnaya Kumara Krishna Yachendra Bahadur Varu, Rajah of Venkatagiri v. Province of Madras AIR (34) 1947 Mad. 5(2) their Lordships quoted with approval Lord Shaw, who delivered the judgment on behalf of the Board in Hoystead v.Commissioner of Taxation 1926 AC 155 and observed as follows (with reference to a situation resembling the one with which we are confronted in this appeal): In the opinion of their Lordships, it is settled, first, that the admission of a fact fundamental to the decision arrived at cannot be withdrawn and a fresh litigation started, with a view of obtaining another judgment upon a different assumption of fact; secondly, the same principle applies not only to an erroneous admission of a fundamental fact, but to an erroneous assumption as to the legal quality of that fact. Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the Court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted litigation would have no end, except when legal ingenuity is exhausted.
In the present case, as has been seen while narrating the facts above, the learned Counsel for the assessee fairly conceded that the stand which the assessee wanted to take up in the present appellate proceedings was directly opposed to what the assessee itself had taken in the course of appellate proceedings for the assessment year 1972-73 and on the basis of which the assessee had obtained the relief referred to above and the said adjudication was accepted by either sides, and yet he submitted that he could raise such a plea in the present appeals, because the years in question were different from 1972-73 and that the principle of res judicata did not apply in income-tax proceedings and that he was wiser now than when he was when he had argued for the assessment year 1972-73, and had, according to him, put forward an erroneous pleading in the course of the assessment year 1972-73. The learned Counsel failed to note that it was not only that an allegedly wrong pleading was taken in respect of the assessment year 1972-73 but that on the basis of such a pleading, he obtained the relief from taxation. He, of course, now submits that the relief was not due to him in the assessment year 1972-73 and urges that the proceedings, which have now been launched on the basis of the aforesaid finding of the learned AAC (which have been accepted by both the sides as correct expression of the opinion by him on the basis of the facts admitted before him), should be thrown out on the ground that the said finding was obtained from the learned AAC on the basis of erroneous pleadings. The aforesaid approach of the learned Counsel appears to us to be directly contrary to the observations of their Lordships of the Hon'ble Madras High Court referred to above. Having obtained the benefit on the basis of the aforementioned pleadings, the assessee cannot, in our opinion, be allowed to go back from the said pleadings on the same subject-matter in respect of the present assessment years, when the action for these years flows directly from the said pleadings and the order of the AAC thereon. Sir Ashotosh Mukherjee formulated the aforesaid principle in his ruling of the Calcutta High Court in 39 CLJ 40 (sic) in the case of Dwijendra Narain Roy v. Joges Chandra De AIR 1924 Cal. 600, as follows : ...It is an elementary rule that a party litigant cannot be permitted to assume inconsistent positions in Court to play fast and loose, to blow hot and cold, to approbate and reprobate to the detriment of his opponent. This wholesome doctrine applies not only to the successive stages of the same suit, but also to another suit than the one in which the position was taken up provided that the second suit grows out of the judgment in the first.
29. The above enunciation of law was approvingly quoted by their Lordships of the Hon'ble Allahabad High Court in the case of Udrej Singh v. Ram Bahal Singh AIR (33) 1946 All. 436. Their Lordships of the Hon'ble Andhra Pradesh High Court have also reiterated the above principle in the case of Indermull Loniya v. Subordinate Judge, Secunderabad AIR 1958 AP 779. After referring to the decision of the Hon'ble Allahabad High Court in the case of Udrej Singh (supra), their Lordships observed that : ...If the parties have taken up a particular position before the Court at one stage of the litigation, it is not open to them to approbate and reprobate and to resile from that position....
30. It is true that as a general rule, the principle of res judicata is not applicable to the decisions of the income-tax authority, as has been pointed out by their Lordships of the Hon'ble Bombay High Court in H.A. Saha & Co. v. CIT  30 ITR 618, but their Lordships have themselves pointed out in that case, that the above rule is subject to the limitation that the effect of revising a decision in a subsequent year should not lead to injustice. In that case, their Lordships were considering the action of the ITO in going back upon the finding reached in the assessee's case in an earlier year. Referring to the action of the income-tax authorities in this regard, their Lordships pointed out that : ...if the Court is satisfied that bfgy depriving the assessee of his rights under the latter decision, in an earlier year, the assessee lost an important advantage or lost some benefit which he could have got under the Income-tax Act, then the Court may take the view that departing from the earlier decision leads to injustice or denial of justice and the Court may prevent an income-tax authority from doing something which should be unjust and inequitable.
The above observations would apply mutatis mutandis to the assessee also as a litigant. What cannot be done by one side, namely, the ITO, cannot also be done by the other side to the litigation, namely, the assessee. If as a result of the assessee's action an injustice is going to be caused to the revenue, the assessee must be prevented from resiling from its earlier stand, where it took advantage of its pleadings and got the benefit.
31. It is true that in the case of CIT v. V.MR.P. Firm  56 ITR 67 their Lordships of the Hon'ble Supreme Court observed that the doctrine of approbate and reprobate cannot operate against the provisions of statute and that if a particular income was not taxable under the Act, it could not be taxed on the basis of estoppel or any other equitable doctrine. According to their Lordships, equity was out of place in tax law and a particular income was either exigible to tax under the taxing statute or it was not and that if it was not, the ITO had no power to impose tax on the said income. The aforesaid observations have to be understood in the context in which they were made. Their Lordships were considering a situation where a certain amount was not income at all and, could not, therefore, be taxed under the Act. The department wanted to tax it on the plea that the assessee had taken advantage of a certain scheme formulated by the Government of India, in terms of which the sums received by the assessee from its debtors would be taxable.
The plea of the assessee was that, if the sums in question represented the principal amount of debt, there could be no question of their being taxed, even when the assessee adopted the scheme formulated by the Government of India. It was in this context that their Lordships observed that if a certain amount was not income, it would not be exigible to tax, and it would not be taxed on the principle of estoppel. Their Lordships made their intention clear by referring to the decision of the Hon'ble Calcutta High Court in the case of Amarendra Narayan Roy v. CIT AIR 1954 Cal. 271 and distinguishing it on facts. In that case, the assessee had challenged the imposition of tax on its concealed income on the basis that the due procedure of law had not been followed in order to tax him. The Hon'ble Calcutta High Court rejected the assessee's submission and said that the concealed income was taxable and, therefore, tax could be recovered from the assessee by the revenue following the procedure laid down in the Voluntary Disclosure Scheme, 1951. The revenue relied on this case of the Hon'ble Calcutta High Court to plead before their Lordships of the Supreme Court in the aforesaid case that the assessee having opted for the scheme of the Government of India, in accordance with which the amounts recovered by it from the debtors were to be taxed as the assessee's income, the assessee could not be allowed to riggle out the net of taxation by saying that the said amounts were not income. Rebutting the aforesaid reasoning of the revenue, their Lordships observed as follows : The decision in Amarendra Narayan Roy v. CIT AIR 1954 Cal. 271 has no bearing on the question raised before us. There the concessional scheme tempted the assessee to disclose voluntarily all his concealed income and he agreed to pay the proper tax upon it. The agreement there related to the quantification of taxable income but in the present case what is sought to be taxed is not a taxable income. The assessee in such a case can certainly raise the plea that his income is not taxable under the Act. We, therefore, reject this plea.
32. The principle which has, thus, been laid down by their Lordships of the Hon'ble Supreme Court in the aforementioned case is that, if an item is not an income and is not taxable as income under the Act, it cannot be brought to tax even with the consent of the assessee, and that, in this sense, the assessee cannot be estopped from pleading that the amount did not have taxable quality on the basis of the doctrine of 'approbate and reprobate.' The amount, which did not have a taxable quality, would not become taxable merely because the assessee had, at one stage, agreed to be assessed in respect thereto. In the present case, as in the case of Amarendra Narayan Roy (supra), there is no doubt about the taxable quality of the income. The income from interest is taxable, though there was dispute at one time between the revenue and the assessee as to which was the year or years in which the said income should be taxed. After considerable litigation, spreading over the assessment years 1971-72 and 1972-73, the matter was decided by the AAC that the interest income aggregating to Rs. 1,83,958 was taxable in the assessee's hands, not in one year, when the amount was decreed in the assessee's favour, but from year to year beginning from 1-1-1967 to 22-6-1971. The decision was accepted by both the sides and on that basis, the present action against the assessee in respect of the assessment years 1968-69 and 1969-70 have been commenced. Part of the sum of Rs. 1,83,958 included in the total income of the assessee for the assessment year 1972-73 has already been excluded as a result of the order of the learned AAC referred to above. Relevant parts of the excluded amount are being sought to be taxed in the present years as per the assessee's pleadings which have been accepted by the AAC. The assessee, in these circumstances, cannot be allowed to go back and thereby cause injustice to the revenue, depriving it altogether of its right of taxing the assessee's income. If we allow the assessee to reprobate on the aforesaid stand, the department would be losing an important advantage inasmuch as the entire amount, which is now being sought to be taxed on the basis of the decision of the AAC, which has been accepted by both the sides, would go without tax, even though it had taxable quality of the years in which the interest income accrued and arose. When this is going to be the result, the Hon'ble Bombay High Court says in H.A. Shah & Co.'s case (supra), that the principle of res judicata should be applied and the litigant concerned, who is trying to reprobate, must not be allowed to reprobate.
33. The assessee's learned Counsel, though given an opportunity to do so, has not been able to bring to our attention any case law which might be militating against the view taken by us above. He had, of course, pleaded that the interest received by the assessee was not income at all and that it was part of the compensation and, hence, a capital receipt. He had relied for this proposition on the decision of the Hon'ble Kerala High Court in the case of CIT v. Periyar & Pareekanni Rubbers Ltd.  87 ITR 666. We have gone through the aforesaid decision and we find that it was not dealing with the awarding of interest given under Section 6(5A), as applied to the State of Haryana. The position of interest under the aforesaid Act is similar to that under the Land Acquisition Act, 1894, and their Lordships of the Hon'ble Kerala High Court themselves held in the aforementioned case that the position under the Land Acquisition Act would be different from what was in that case, where the land had been taken over by the Government otherwise than under the Land Acquisition Act.
The ratio of the aforesaid case, therefore does not help the assessee.
The matter is, in our opinion, squarely covered by the ratio of the decision of the Hon'ble Allahabad High Court in Virendra Singh's case (supra) and Mote Lal Chaddami Lal Jain's case (supra). The interest paid in the present case is on the capital sum of compensation for paying it late. It is, therefore, taxable.
34. In a recent case, Om Parkash v. CIT  148 ITR 180, their Lordships of Hon'ble Delhi High Court dealt with a situation where interest for 22 years was awarded by arbitration in one year for acquiring land under the Requisitioned Land (Continuance of Powers) Act, 1947, and Requisitioning and Acquisition of Immovable Property Act, 1952. There was no provision under these Acts for payment of interest. The arbitrator, however, awarded interest by his award dated 26-4-1967 since 1945. The aforesaid interest was held to be "in lieu of the loss of income for those 22 years during which period the assessee did not have the lands and did not have the compensation amount". Their Lordships further pointed out that : ...If the compensation amount had been with the assessee he could have earned interest or income from the same. If the land had been with the assessee he could have derived income from utilising the land. But, for 22 years, neither was with him. Therefore, this interest is to be treated as relating to the loss of income during these 22 years and has not to be treated as a revenue receipt for only one year.
Thus, the interest was held by the Hon'ble Delhi High Court to be not only revenue receipt being compensation for loss of profit, but also that it accrued from year to year. The above ratio is based directly on the ratio of the decision of the Hon'ble Supreme Court in the case of Satinder Singh v. Umrao Singh AIR 1961 SC 908. The facts of the present case have remarkable similarity with the facts of the above case. Here too, the Court awarded interest on 22-6-1971 for the period 1-4-1962 onwards for the reason that the assessee-company was kept out of the electricity undertaking as well as compensation during the aforesaid period. The nature of interest is clearly of compensation for loss of income for the aforesaid period. It has, therefore, to be taxed as revenue receipt and on year to year basis, and not all in one lump sum.
The added factor in the present case is that such a right to receive interest has also been made statutory with effect from 1960 and so it derives its strength not from the award but from the statute itself.
The plea of the assessee to this effect in the appellate proceedings for the assessment year 1972-73 was correct and was rightly accepted by the learned AAC. The plea of the learned Counsel now that the said plea was wrong has, thus, to be rejected as not sustainable in law. The said finding is not only binding on both the sides, but also correct.
35. In view of what we have stated above, we hold that the amounts in question have been rightly brought to assessment by the ITO in respect of both the assessment years. Accordingly, the assessee's appeal and the cross-objection stand rejected. No of her pleas or grounds were pressed before us.